ADB: Supply shortfalls from Russia, Ukraine to lead to decline in Azerbaijan’s imports by 10.3%

Azerbaijan’s gross international reserves including SOFAZ assets are projected to increase by 1.8% in 2022 to $53 billion and 2.5% in 2023 to $54.3 billion, Report informs referring to the updated Asian Development Bank’s Asian Development Outlook (ADO) 2022.

The current account surplus is projected to widen to 20.2% of GDP on higher export volume and prices and then decline to 16.9% in 2023 as moderating oil prices and a small decline in oil export volume trim earnings - the merchandise trade surplus expanding by 48.5% in 2022, reflecting a 14% rise in export earnings, then falling by 10.1% in 2023.

Imports are projected to decline by 10.3% in 2022 and 4.8% in 2023 with supply shortfalls from Russia and Ukraine, as well as higher excise taxes on selected goods.

“The deficit in services is expected to narrow with rising tourism, mainly from Gulf countries, and the completion of major construction services in the oil industry,” reads the report.

ADB notes that Most countries in the Caucasus and Central Asia, as well as Mongolia, have close trade links with Russia: “The economic downturn and the ruble’s depreciation will reduce exports to Russia, which account for about 20% of total exports in Armenia and Georgia, and more than 10% in the Kyrgyz Republic and Uzbekistan. Exposure to Russian demand is lower in Azerbaijan, Tajikistan, and Turkmenistan, which mostly export energy products and base metals to the EU, the PRC, and Turkey. The downturn in Russia may also cause supply disruptions, particularly affecting countries importing large volumes from Russia. Russia accounts for more than 15% of imports for all countries in the Caucasus and Central Asia, except Georgia. Exposure exceeds 25% for Armenia, Kazakhstan, and Mongolia. The war may also disrupt trade routes for some of these economies.”